Alibaba's Taobao told to leave Taiwan in 6 months

After Alibaba.com was asked to leave Taiwan within six months earlier this year, the Chinese technology giant's popular online marketplace, Taobao, has been dealt the same fate.
Written by Cyrus Lee, Contributor

Taiwanese authorities have given Alibaba Group six months to close down its Taobao operations on the island as the company failed to apply for the permit required for a Chinese mainland company to do business, local media reported on May 15.

Taobao came into Taiwan registered as a Hong Kong company and did not apply for a permit. Consequently, a fine of NT$240,000 ($7,848) was imposed on Taobao.

It is the second expulsion to hit Alibaba this year for failing to gain the proper permits.

In March, Alibaba.com was required to leave Taiwan within six months for similar reasons, along with a fine of NT$120,000 ($3,924).

In a reply to Chinese media on Monday, Alibaba said it was trying to communicate with relevant regulatory authorities in Taiwan, and its Taobao.com and business-to-business platform would not be affected on the island.

Alibaba has faced a clutch of headaches recently as a group of luxury brands, including Gucci, Balenciaga, and Yves Saint Laurent, also filed a lawsuit in the US claiming that Alibaba is knowingly helped counterfeiters to sell fake goods on its platform.

The lawsuit alleges that Alibaba "conspired to manufacture, offer for sale and traffic in counterfeit products bearing the brands' trademarks without their permission". It raised an example of a merchant on Taobao selling obviously fake Gucci bags for wholesale prices of $2 to $5 each if a buyer purchased a minimum of 2,000 bags, while the genuine bag is normally sold for $795.

Alibaba said in a statement that the company has a strong track record, and is working in partnership with numerous brands to help them protect their intellectual property.

Yahoo's Alibaba spin-off to proceed

Yahoo said it is still planning to work towards completing a planned spin-off of its stake in Chinese online giant Alibaba.

Yahoo has acknowledged that US authorities are reviewing the tax-free status of its planned spin-off of its stake in Chinese online giant Alibaba, but said the deal will proceed anyway.

A statement from the California company on Wednesday said the Internal Revenue Service had indicated that the tax agency "plans to study its rules" on tax-free transactions such as the one planned for Alibaba.

The IRS statement is "not specific to Yahoo's planned Q4 2015 spin-off" of its Alibaba stake, and "reflects no change in applicable law and does not affect previously filed ruling requests."

"Yahoo continues to work toward completing the planned spin-off in Q4 2015," the company said.

Yahoo announced the plan in January to divest its Alibaba stake using a structure that avoids a potential tax bill of up to $16 billion.

The plan calls for the creation of an independent investment company called SpinCo to hold the Alibaba shares, but which would be owned by Yahoo shareholders.

On Tuesday, Yahoo shares plunged 7.6 percent on reports that the IRS could deny the tax-free status.

Yahoo bought a 40 percent stake in the Chinese online giant in 2005 for $1 billion.

The current stake of some 15 percent is worth more than $30 billion.

With AAP

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